Idea Email: Why Your Profits Should Increase After a Slight Shift from Acquisition to Retention Marketing

In an Idea Email sent in 2013, we suggested that a möobius strip, or infinity loop, is the best graphical representation of the customer journey, or the “customer life cycle.” We like the möobius metaphor because it demonstrates there are two distinct states of being a customer:

1 | Buy: This is the point in the journey when a customer determines through research and shopping that they have a need that can be fulfilled by your product or service. This individual is going through the process of seeking and discovery.

2 | Own: This describes the part of the journey after the customer makes the decision to purchase your product or service.

However, the möobius strip graphic fails to demonstrate two important points:

1 | As shown by Bain and others, the ROI on marketing dollars devoted to retention of your current customers (owners) can be 7–10 times more than the ROI of marketing focused on the goal of the initial transaction.

2 | Despite that, research from Econsultancy and others estimate that marketers typically invest 80 percent of their budgets to the left loop of the möobius (customer acquisition) and 20 percent to the right loop (owner retention and loyalty).

In other words, while the use of a möobius strip with equal-sized loops depicts the customer’s journey, it doesn’t illustrate the marketer’s journey.

The möobius metaphor applied to the marketer’s journey looks like this:

The average balance of marketing budgets is 80 percent targeting acquisition and 20 percent focused on retention. (Econsultancy)

Bottom line: We are not suggesting that marketers drop their acquisition marketing. Obviously, without new customers, eventually there will be no existing owners. However, we are pointing out the value in intelligently balancing marketing efforts and putting more weight on helping your owners reach the goals they had when they first purchased your products and services. It’s a strategy that can help you outstrip the competition.

Image: iStock

About Hammock Idea Email | This post is part of Hammock’s award-winning Idea Email series. Idea Emails are sent every other week and share one insightful marketing idea. Idea Email comes in two flavors: Original and Healthcare. To subscribe to the original Idea Email (general marketing ideas), click here . To subscribe to the Healthcare Idea Email (healthcare marketing ideas), click here.